Defining a Marketing Mix

The value proposition explains why a consumer should buy a product or use a service and how the product or service will add more value, or better solve a problem, than other similar offerings. Once you get the value proposition right, you still have to actually deliver value to your target customer. The marketing mix describes the tools that marketers use to create value for customers.

Reaching Customers Through the Marketing Mix

The value proposition is a simple, powerful statement of value, but it is only the tip of the iceberg. How do marketing professionals ensure that they are reaching and delivering value to the target customer?

Take yourself, as a “target customer.”  Think about your cell phone. What would make you want to buy a new one? How might the following issues affect your purchasing decision?

• Features – A company has just released a new phone with amazing features that appeal to you.
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• Price – You’re concerned about the price—is this phone a good deal? Too expensive? So cheap that you suspect there’s a “catch”?
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• Information – How did you find out about this phone? Did you see an ad? Hear about it from a friend? See pictures and comments about it online?
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• Customer service – Is your cell service provider making it easier for you to buy this phone with a new plan or an upgrade?
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• Convenience – Could you easily buy it online in a moment of indulgence?

You can see multiple factors might influence your thinking and decision about what to buy—a mix of factors. Taken together, these factors are all part of the “marketing mix.”

Organizations must find the right combination of factors that allow them to gain an advantage over their competitors. This combination—the marketing mix—is the combination of factors that a company controls to provide value to its target customers.

The following video illustrates how the marketing mix changes depending on the target customer: ^[1]

Evolving Definitions of the Marketing Mix

There are a few different ways the marketing mix is presented. During the 1950s the components of the marketing mix were conceived as the “four Ps” and were defined as follows:

1. Product: the goods and services offered
2. Promotion: communication and information
3. Place: distribution or delivery
4. Price: ensuring fair value in the transaction

Figure 6.6: The Marketing Mix

Over time, new categories of the marketing mix have been proposed. Most are more consumer-oriented and attempt to better fit the movement toward a marketing orientation and a greater emphasis on customer value. One example is the four Cs, proposed by Robert F Lauterborn in 1990 ^[2]:

1. Customer solution: what the customer wants and needs
2. Communication: a two-way dialogue with the customer
3. Convenience: an easy process to act or buy
4. Cost: the customer’s cost to satisfy that want or need

The four Cs include a greater focus on the customer but align nicely with the older four Ps. They also enable one to think about the marketing mix for services, not just products. While it is difficult to think about hotel accommodations as a distinct product, it is much easier to think about a hotel creating a customer solution. You can see how the four Ps compare with the four Cs in the chart below:

Comparing The 4Ps and the 4Cs

Whether we reference the four Ps or the four Cs, it is important to recognize that marketing requires attention to a range of different approaches and variables that influence customer behavior. Getting the right mix of activities is essential for marketing success.

Traffic Jam Whopper ^[3]

Product

In the marketing mix, the term product means the solution that the customer wants and needs. In this context, we focus on the solution rather than only on the physical product. Examples of the product include:

• The Tesla Model S, a premium electric car
• A Stay at a Holiday Inn Express, a low-price national hotel chain
• Doritos Nachos Cheese, a snack food
• Simple, an online banking service

Each of these products has a unique set of features, design, name, and brand that are focused on a target customer. The characteristics of the products are different from competitors’ products.

Conducting Marketing Research

Before settling on a strategy Marketers must do some homework. First, they need to zero in on a target market, they then have to find out what various people think of the product. More precisely, Marketers need answers to questions like the following:

• Who are our potential customers?
• What do they like about the product? What would they change?
• How much are they willing to pay for it?
• Where will they expect to buy it?
• How can we distinguish it from competing products?

Companies can make informed decisions because their marketing team provides answers to key questions through marketing research—the process of collecting and analyzing the data that are relevant to a specific marketing situation. This data had to be collected systematically. Market research seeks two types of data:

1. Marketers generally begin by looking at secondary data—information already collected, whether by the company or by others, that pertains to the target market.
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2. With secondary data in hand, they’re prepared to collect primary data—newly collected information that addresses specific questions.

Secondary data can come from inside or outside the organization. Internally available data includes sales reports and other information on customers. External data can come from several sources. Statistics Canada, for example, posts demographic information on Canadian households (such as age, income, education, and the number of members), both for the country as a whole and for specific geographic areas.

Using secondary data that is already available (and free) is a lot easier than collecting your own information. Unfortunately, however, secondary data doesn’t always answer all the questions being asked. To get these answers, marketing teams may also have to conduct primary research, working directly with members of their target market.

There is a variety of tools for collecting information from these people, each of which has its advantages and disadvantages. To understand the marketing-research process fully, we need to describe the most common of these tools:

• Surveys – Sometimes marketers mail questionnaires to members of the target market. The process is time-consuming and the response rate is generally low. Online surveys are easier to answer and so get better response rates than other approaches.
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• Personal interviews – Though time-consuming, personal interviews not only let you talk with real people but also let you demonstrate the product. You can also clarify answers and ask open-ended questions.
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• Focus groups – With a focus group, you can bring together a group of individuals (perhaps six to ten) and ask them questions. A trained moderator can explain the purpose of the group and lead the discussion. If sessions are run effectively, you can come away with valuable information about customer responses to both your product and your marketing strategy.

Researching your target market is necessary before you launch a new product, but the benefits of marketing research don’t extend merely to brand-new products. Companies also use it when they’re deciding whether or not to refine an existing product or develop a new marketing strategy for an existing product. PepsiCo Canada, for example, relaunched the Doritos Ketchup chip in 2014 as a limited-time-only retro flavour and it was a tremendous success. Because of this positive customer feedback, instead of looking for a new chip flavour the following year, they announced that they would continue the ketchup version, accompanied it with a ‘hold on to your phone’ contest and app that awarded winners with a years-supply of the chips, as well as the limited availability of a dozen ‘ketchup roses’ during Valentine’s season. ^[4]

Promotion

In the marketing mix, the term promotion refers to the communications that occur between the company and the customer. Promotion includes both the messages sent by the company and messages that customers send to the public about their experience.

Marketing professionals have an increasingly difficult job influencing promotions that cannot be controlled by the company. The company’s formal messages and advertising are only one part of promotions.

Your promotion mix—how you communicate with customers—may include advertising, personal selling, sales promotion, and publicity. These are all tools for telling people about your product and persuading potential customers to buy it. Before deciding on an appropriate promotional strategy, you should consider a few questions:

• What’s the main purpose of the promotion?
• What is my target market?
• Which product features should I emphasize?
• How much can I afford to invest in a promotion campaign?
• How do my competitors promote their products?

To promote a product, you need to imprint a clear image of it in the minds of your target audience. What do you think of, for instance, when you hear “Ritz-Carlton”? What about “Motel 6”? They’re both hotel chains, that have been quite successful in the hospitality industry, but they project very different images to appeal to different clientele. The differences are evident in their promotions. The Ritz-Carlton website describes itself as the “gold standard” and promises that the chain provides “the finest personal service and facilities throughout the world”. Motel 6, by contrast, characterizes its facilities as “no frills ” and assures you that you’ll pay “the lowest price”. ^[5]

Promotional Tools

• Advertising – Advertising is paid, non-personal communication designed to create awareness of a product or company. Ads are everywhere—in print media (such as newspapers, magazines, and mailers), on billboards, in broadcast media (radio and TV), and, increasingly, online. It’s hard to escape the constant barrage of advertising messages; it’s estimated that the average consumer is confronted by about 5,000 ad messages each day (compared with about 500 ads a day in the 1970s) ^[6]. For this very reason, ironically, ads aren’t as effective as they used to be. Because we’ve learned to tune them out, companies now have to come up with innovative ways to get through to potential customers.
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  The choice of advertising media depends on your product, target audience, and budget. A travel agency selling spring break getaways to college students might post flyers on campus bulletin boards or run ads in campus newspapers. The co-founders of Sleep Country Canada found radio ads particularly effective, ingraining their catchy jingle, “Why buy a mattress anywhere else?” into listeners nationwide.
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• Personal Selling – Personal selling refers to one-on-one communication with customers or potential customers. This type of interaction is necessary for selling large-ticket items, such as homes, and it’s also effective in situations in which personal attention helps to close a sale, such as sales of cars and insurance policies.
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  Many retail stores depend on the expertise and enthusiasm of their salespeople to persuade customers to buy. Home Depot has grown into a home goods giant in large part because it fosters one-on-one interactions between salespeople and customers. The real difference between Home Depot and everyone else isn’t the merchandise; it’s the friendly, easy-to-understand advice that salespeople give to novice homeowners, according to one of its co-founders ^[7]. Best Buy’s knowledgeable sales associates make them “uniquely positioned to help consumers navigate the increasing complexity of today’s technological landscape” according to CEO Hubert Joly ^[8].
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• Sales Promotion – It’s likely that at some point, you have purchased an item with a coupon or because it was advertised as a buy-one-get-one special. If so, you have responded to a sales promotion – one of the many ways that sellers provide incentives for customers to buy. Sales promotion activities include not only those mentioned above but also other forms of discounting, sampling, trade shows, in-store displays, and even sweepstakes. Some promotional activities are targeted directly to consumers and are designed to motivate them to purchase now. You’ve probably heard advertisers make statements like “limited time only” or “while supplies last”. If so, you’ve encountered a sales promotion directed at consumers. Other forms of sales promotion are directed at dealers and intermediaries. Trade shows are one example of a dealer-focused promotion. Mammoth convention centers such as the Enercare Centre in Toronto host enormous events in which manufacturers can display their new products to retailers and other interested parties. At food shows, for example, potential buyers can sample products that manufacturers hope to launch to the market. Feedback from prospective buyers can even result in changes to new product formulations or decisions not to launch.
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• Publicity and Public Relations – Free publicity—say, getting your company or your product mentioned or pictured in a newspaper or on TV—can often generate more customer interest than a costly ad. When Dr. Dre and Jimmy Iovine were finalizing the development of their Beats headphones, they sent a pair to LeBron James. He liked them so much that he asked for 15 more pairs, and they “turned up on the ears of every member of the 2008 U.S. Olympic basketball team when they arrived in Shanghai. ‘Now that’s marketing,’ says Iovine” ^[9]. It wasn’t long before the pricey headphones became a must-have fashion accessory for everyone from celebrities to high school students.
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  Consumer perception of a company is often important to a company’s success. Many companies, therefore, manage their public relations to garner favorable publicity for themselves and their products. When the company does something noteworthy, such as sponsoring a fund-raising event, the public relations department may issue a press release to promote the event. When the company does something negative, such as selling a prescription drug that has unexpected side effects, the public relations department will work to control the damage to the company. Each year the Hay Group and Korn Ferry survey more than a thousand company top executives, directors, and industry leaders in twenty countries to identify companies that have exhibited exceptional integrity or commitment to corporate social responsibility. The rankings are published annually as Fortune magazine’s “World’s Most Admired Companies.®” ^[10] Topping the list in 2016 are Apple, Alphabet (Google), Amazon, Berkshire Hathaway, and Starbucks ^[11].

Place

In the marketing mix, the term place refers to the distribution of the product. Where does the customer buy the product? Place might be a traditional brick-and-mortar store, or it could be online. Examples include:

• Distribution through an online retailer such as Amazon.ca
• Use of a direct sales force that sells directly to buyers
• Sales through the company’s Web site, such as shoe purchases at Nike.ca
• Sales by a distributor or partner, such as the purchase of a Samsung phone from Best Buy or a Verizon store

A great deal is involved in getting a product to the place in which it is ultimately sold. If you’re a fast food retailer, for example, you’ll want your restaurants to be in high-traffic areas to maximize your potential business. If your business is selling beer, you’ll want it to be offered in bars, restaurants, grocery stores, convenience stores, and even stadiums. Placing a product in each of these locations requires substantial negotiations with the owners of the space, and often the payment of slotting fees, an allowance paid by the manufacturer to secure space on store shelves.

Retailers are marketing intermediaries that sell products to the eventual consumer. Without retailers, companies would have a much more difficult time selling directly to individual consumers, no doubt at a substantially higher cost. The most common types of retailers are summarized in the Figure below. You will likely recognize many of the examples provided. It is important to note that many retailers do not fit neatly into only one category. For example, Walmart, which began as a discount store, has added groceries to many of its outlets, also placing it in competition with supermarkets.

Price

In the marketing mix, the term “price” refers to the cost to the customer. This requires the company to analyze the product’s value for the target customer. Examples of prices include:

• The price of a used college textbook in the campus bookstore
• Promotional pricing such as Sonic Drive-In’s half-price cheeseburgers on Tuesdays
• Discounts to trade customers, such as furniture discounts for interior designers

Marketing professionals must analyze what buyers are willing to pay, what competitors are charging, and what the price means to the target customer when calculating the product’s value. Determining price is almost always a complicated analysis that brings together many variables.